Differing rules on direct property ‘astounding’
Despite the stringent regulations that govern the financial services industry and the bid to make the industry more transparent, it was astounding that direct property was still not a financial product, a financial planner said.
Director of Epona Financial Guidance, Lisa Duggan, said amidst Australia's love affair with property investing, "we've got this, particularly investment property, that kind of forms part of a wealth portfolio with completely different rules around it".
Most clients sought advice on property from real estate agents, mortgage brokers, or perhaps property advocates.
Duggan pointed out that many property advocates who advertised their work for the client were paid commissions from real estate agents.
"So the natural conflict there is to only recommend a real estate agent that pays the best level of commissions," she said.
Also, while they may have expertise on the property value and return prospects, they would not have a "full helicopter view" of the client's financial situation and objective.
"They're not aware what the impact and the cash flow is going to be, what their future plans are, whether they would require liquid funds, or whether it is long-term," Duggan said.
"They're only giving advice from their specific angle whereas I think it needs to be brought into the full picture with someone that actually knows what this client's trying to achieve over the next five, 10, or 20 years."
She was eager to see legislation re-worked that would enable advisers to advise on direct property, and to some extent, estate planning, although she acknowledged the need to involve other professionals like lawyers in these areas.
Duggan said she had e-mailed Minister for Finance, Mathias Cormann, as well as the Minister for Women, Michaelia Cash, but had not heard back from them.
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